Gift Card Redemptions
While online and retail vacation shopping sales have satisfied or surpassed expectations for many merchants in the last few years, there is another “rush” for all merchants to prepare for: gift card redemption.
In accordance with Hitwise, an online intelligence service, the market share of U.S. Internet searches consisting of the words “gift card” was up 32% for the week ending December 10, 2005 as compared to the previous week. In fact, the National Retail Federation expects gift card sales to increase 6.6% this holiday season to 18.48 billion dollars, with consumers spending an average of $88 dollars on gift cards or 15.6% of their vacation shopping budget plan.
Gift certificates have always been a popular gift option for the hard to please recipient or perhaps for the lazy consumer. For the gift giver, it enables a fast purchase at whatever shop or online merchant they choose, with a dollar amount that fits their budget plan. For the recipient, they can pick what they desire from a particular merchant and for the most part use the card at their convenience.
The Gift Card Is The Perfect Gift Option
But for some, offering a gift card is a cop-out, thinking it is too impersonal and deciding to hand pick a gift and choosing something special and distinct for a loved one or buddy. However, for some, the gift card is the perfect gift option, with family or friends even suggesting the store or online merchant they choose.
For the merchants, it has actually extended the vacation shopping season because they can not tape the sale until the recipient utilizes the gift card to make a purchase. This holds down sales figures in November and December, however supplies an increase in January when most cards are redeemed. An additional increase is provided by the reality that the majority of the consumers who redeem their gift cards typically invest 15% to 50% more than the face value of the card when they pick their vacation gift.
Are There Drawbacks To Gift Cards?
There are some drawbacks to gift cards. Some merchants clear unused gift cards off the books by subtracting off of the stated value of the card, an inactivity fee (normally $2.50 monthly) after a specific quantity of time. Some gift cards have an expiration date and others come with special conditions or limitations. However, consumer outrage has actually prompted many states across the nation to introduce legislation restricting or banning the fees. Furthermore, there is no federal law on gift cards however, two Republican congressmen, Joe Barton of Texas and Charlie Bass of New Hampshire, have asked for that the Federal Trade Commission investigate the way retailers conduct their gift card programs.
Is giving a gift card too impersonal? Is it the best gift choice? That question is up for dispute and is an individual choice. However with annual gift card sales forecasted to reach 90 billion dollars by 2007 (Ernst & Young 2005), the gift card is here to stay.